Sixth Circuit leaves Kalshi's sports contracts exposed to Ohio and Tennessee gambling law
Sixth Circuit judges let Ohio and Tennessee enforce gambling law against Kalshi's sports contracts, putting two of three appeals courts on the states' side. New Jersey's contrary ruling still stands, so the same federally registered contract now has a different legal status depending on the state.
The Investor · Invest desk
What happened
- On Sept. 25 a three-judge Sixth Circuit panel upheld Ohio's refusal to shield Kalshi from state gambling law and threw out the injunction Kalshi had won in Tennessee.
- The panel found Kalshi had not shown its sports contracts are swaps under the Commodity Exchange Act, and that even as swaps they would not displace the two states' gambling rules.
- The ruling came a month after another appeals court sided with Nevada, while the Third Circuit's ruling for Kalshi in New Jersey still stands.
- Ohio's Casino Control Commission had told Kalshi it was selling sports products without a state license and alleged that people under the state's minimum age of 21 could trade.
Why it matters
- What it limits constraint Kalshi can no longer plan sports as one national product: buyers in Ohio and New Jersey hold an identical contract under different legal protection, so distribution has to be planned state by state.
- Who has to decide decision Kalshi now has to decide whether to seek state gaming licenses, which would bring the 21 age floor Ohio and Tennessee impose, or keep litigating toward rehearing or the Supreme Court.
- What it sets up precedent With two circuits for the states and one for Kalshi, any exchange relying on CFTC registration to list sports contracts should expect state regulators to challenge that defence circuit by circuit.
Next story · Invest · Oct 9
CFTC carves casino gambling out of its swap definition to claim event contracts for itselfConfirmed6 publishers
Kalshi has to win twice to get back where it was. The panel's second holding assumed Kalshi was right that its sports contracts are swaps, and ruled against it anyway [4]. A later win on the swap question, on remand or on appeal, would leave that ruling standing. The second holding is about the line between federal and state authority. It applies whatever the contract pays on, whether a golf result or a combination of player and game outcomes, both of which the 49-page opinion lists among Kalshi's markets [18][5].
The posture limits how far the ruling reaches. These were rulings on preliminary injunctions, orders that would stop state officials from enforcing their laws while the suits proceed, and both cases go back to district courts [9]. Nothing changes in practice in Ohio, where a district judge had already refused Kalshi that protection [8]. Tennessee is different. A district judge there had restrained state officials after the Sports Wagering Council sent Kalshi a cease-and-desist letter, so before the appeal the same legal theory had produced opposite orders inside one circuit [7]. With the Tennessee order vacated, neither state is restrained, and a state that is no longer restrained can try to enforce its existing rules [17][15].
Kalshi built its sports business on the federal route. It registered with the CFTC as a designated contract market in 2020, having previously listed contracts on climate, economics, elections and crypto, and self-certified sports event contracts on Jan. 22, 2025 [12][19][13]. Neither Ohio nor Tennessee has issued it a gaming license [13]. The Ohio commission's claim that people under 21 could use the exchange is an allegation in the court record, not a finding that any particular underage customer traded [10]. The report does not include Kalshi's trading volume or revenue by state.
Kalshi spokesperson Dani Lever told Reuters that the company expected the ruling to face further review [6]. A rehearing, a further appeal or a Supreme Court decision could change the position, and the remanded suits still have to be decided on the merits [15][9]. I think the evidence supports a specific claim. Two of the three circuits to rule on sports contracts have sided with the states [16], and in those states Kalshi's federal registration is an argument it has to win in court, one state at a time. The claim fails if the Supreme Court holds that the Commodity Exchange Act displaces state gambling law for contracts listed on a registered exchange [15].
What to watch
- Whether Kalshi seeks rehearing in the Sixth Circuit or asks the Supreme Court to resolve the conflict with the Third Circuit's New Jersey ruling.
- Whether Tennessee's Sports Wagering Council acts on its cease-and-desist letter now that the district court's injunction is gone.
- How the Ohio and Tennessee district courts decide the swap question on remand, on a fuller record than a preliminary-injunction motion.
Information, not investment advice. This story is general information about companies and markets, drawn from cited reporting. It is not a recommendation to buy, sell or hold any security; check the cited sources before acting.
Clarity's read
What the record supports and how the coverage leans. The claims behind it follow.
Reality
- Evidence82
- Adoption
- Not scored
- Hype gap+15
- Incentives45
- Confidence76
Perspective Coverage
6 publishers- Builder
- Builder 14%
- Operator
- Operator 46%
- Investor
- Investor 40%
Claim ledger
Ranked by verification strength, evidence, and original report placement.
- [1]
The Sixth Circuit ruled against Kalshi in Ohio and Tennessee a month after another appeals court sided with Nevada; New Jersey still has a conflicting ruling.
- [2]
Three federal appellate circuits have now addressed sports contracts, with the Third Circuit on the other side.
- [3]
On Sept. 25, a three-judge Sixth Circuit panel ruled in two cases involving Ohio and Tennessee, affirming a denied preliminary injunction in Ohio and vacating a granted injunction in Tennessee.
- [4]
The three judges said Kalshi had not shown that the sports contracts qualify as swaps under the Commodity Exchange Act; they then assumed, for the sake of argument, that the contracts were swaps and still found that the federal statute did not displace Ohio's and Tennessee's gambling rules.
- [5]
The Sixth Circuit opinion is 49 pages, in the consolidated cases KalshiEX LLC v. Schuler and KalshiEX LLC v. Orgel.
- [6]
Kalshi spokesperson Dani Lever told Reuters that the company expected the ruling to face further review and argued that different rules at state borders undermine a national market.
- [7]
Tennessee's Sports Wagering Council sent Kalshi a cease-and-desist letter; Kalshi sued and a Tennessee district judge granted protection against state officials; the state appealed. In one federal circuit the same legal theory had produced one order allowing enforcement and another restraining it.
- [8]
Kalshi sued to prevent enforcement in Ohio, and an Ohio district judge refused a preliminary injunction.
- [9]
Both cases concern preliminary injunctions, orders that would stop state officials from enforcing their laws while litigation proceeds; the panel returned both cases to lower courts, and neither holding is a final nationwide ban on sports prediction markets.
- [10]
Ohio's Casino Control Commission warned Kalshi that it was offering sports products without a state license, raised its 21-year minimum and alleged that people below that age could use the exchange; these are the commission's allegations in the court record, not an independent finding that a particular underage customer traded.
- [11]
An Ohio resident who wants to buy a Kalshi contract on a basketball game faces a different legal position from a New Jersey resident buying the same contract; the exchange and the payoff can be identical.
- [12]
Kalshi registered as a designated contract market with the Commodity Futures Trading Commission in 2020.
- [13]
Kalshi self-certified sports contracts on Jan. 22, 2025; neither Ohio nor Tennessee has issued it a gaming license.
- [14]
Ohio and Tennessee each set 21 as the minimum age for sports wagering, according to the opinion.
- [15]
A state that is no longer restrained can try to enforce its existing rules; a later appeal, rehearing or Supreme Court decision could alter the position.
- [16]
Two of the three federal appellate circuits that have addressed sports contracts have sided with the states; one, the Third Circuit, has sided with Kalshi.
- [17]
Before the appeal, district courts in the Sixth Circuit had split one-one on restraining the states; after the Sept. 25 ruling, neither Ohio nor Tennessee is restrained from enforcing against Kalshi.
- [18]
The opinion describes Kalshi markets covering tournament results, golf, soccer statistics and combinations of player and game outcomes.
- [19]
Kalshi had previously offered contracts on climate, economics, elections and crypto.
Sources
6 independent publishers whose own reporting we read for this story.
- cnbc.comAppeals court rules states can regulate sports prediction markets
1 article
- cointelegraph.comKalshi loses appeal, setting up potential Supreme Court case
2 articles · September 26, 2026
- crypto.newsKalshi lost another appeals case. Can states regulate prediction markets as gambling?
1 article · September 26, 2026
- cryptobriefing.comKalshi faces legal challenges as court battles escalate
1 article · October 6, 2026
- cryptopolitan.comKalshi loses another major court fight as states win power to regulate sports prediction markets
1 article · September 25, 2026
- unchainedcrypto.comKalshi Loses Again as Sixth Circuit Says States Can Police Its Sports Contracts - Unchained
1 article · September 25, 2026
Topics and entities
Entities
- Commodity Exchange Act
- CFTC
- Ohio Casino Control Commission
- Jonathan Skrmetti
- U.S. Court of Appeals for the Sixth Circuit
- Kalshi
- Tennessee Sports Wagering Council
- Ninth Circuit
- U.S. Court of Appeals for the Third Circuit